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10 Highway 35, P.O. Box 500, Red Bank, N.J. 07701 (732) 747-7800
Chairman of the Board
FEBRUARY 7, 2006
1. | The election of directors of the Company for the ensuing year, to serve until the next Annual Meeting of Shareholders of the Company, and until their respective successors may be elected and qualified; |
2. | The ratification of the selection of Ernst & Young LLP, an independent registered public accounting firm, to examine the financial statements of the Company for the year ending October 31, 2006; and |
3. | The transaction of such other business as may properly come before the meeting and any adjournment thereof. |
1. | Via the Internet pursuant to the instructions on the enclosed proxy card; |
2. | Calling the toll-free number on the enclosed proxy card; or |
3. | Signing, dating and returning the enclosed proxy card in the envelope provided. |
PETER S. REINHART
Secretary
If you are a shareholder of record and you plan to attend the Annual Meeting, please mark the appropriate box on your proxy card or, if applicable, so indicate when designating a proxy via the Internet or by telephone. If your shares are held by a bank, broker or other intermediary and you plan to attend, please send written notice to Hovnanian Enterprises, Inc., 10 Highway 35, P.O. Box 500, Red Bank, New Jersey 07701, Attention: Peter S. Reinhart, Secretary, and enclose evidence of your ownership (such as a letter from the bank, broker or other intermediary confirming your ownership or a bank or brokerage firm account statement). The names of all those planning to attend will be placed on an admission list held at the registration desk at the entrance to the meeting. If you do not plan to attend the Annual Meeting, please designate a proxy by mail or, if applicable, via the Internet or by telephone. If you choose to vote by mail, please sign and date the proxy card and return it in the pre-addressed envelope provided so that your shares will be voted. The envelope requires no postage if mailed in the United States. |
10 HIGHWAY 35
P.O. BOX 500
RED BANK, NEW JERSEY 07701
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Class A Common Stock (1) | | Class B Common Stock (1) | | Depositary Shares (1)(3) | | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Directors, Nominees for Director, Certain Executive Officers, Directors and Executive Officers as a Group and Holders of More Than 5% | | Amount and Nature of Beneficial Ownership | | Percent of Class (2) | | Amount and Nature of Beneficial Ownership | | Percent of Class (2) | | Amount and Nature of Beneficial Ownership | | Percent of Class | |||||||||||||||
Kevork S. Hovnanian (4) | 7,520,424 | 16.0 | % | 11,238,939 | 76.6 | % | — | — | |||||||||||||||||||
Ara K. Hovnanian (5) | 4,655,125 | 9.6 | % | 2,555,419 | 17.4 | % | — | — | |||||||||||||||||||
Paul W. Buchanan (6) | 65,000 | 0.1 | % | — | — | — | — | ||||||||||||||||||||
Robert B. Coutts (11) | — | — | — | — | — | — | |||||||||||||||||||||
Geaton A. DeCesaris, Jr. (7)(8)(9)(10) | 945,995 | 2.0 | % | — | — | — | — | ||||||||||||||||||||
Arthur M. Greenbaum | 30,790 | 0.1 | % | 3,000 | — | — | — | ||||||||||||||||||||
Kevin C. Hake | 18,713 | — | — | — | — | — | |||||||||||||||||||||
Edward A. Kangas | 37,508 | 0.1 | % | — | — | — | — | ||||||||||||||||||||
Joseph A. Marengi (11) | — | — | — | — | — | — | |||||||||||||||||||||
Desmond P. McDonald | 39,647 | 0.1 | % | — | — | — | — | ||||||||||||||||||||
John J. Robbins | 34,332 | 0.1 | % | — | — | — | — | ||||||||||||||||||||
J. Larry Sorsby | 256,802 | 0.5 | % | — | — | — | — | ||||||||||||||||||||
Stephen D. Weinroth | 78,008 | 0.2 | % | 4,500 | — | — | — | ||||||||||||||||||||
EARNEST Partners, L.L.C. (12) | 8,714,886 | 18.5 | % | — | — | N/A | N/A | ||||||||||||||||||||
Tontine Management, L.L.C. and affiliates (13) | 2,983,187 | 6.3 | % | — | — | N/A | N/A | ||||||||||||||||||||
All Directors and executive officers as a group (12 persons) | 13,712,532 | 28.0 | % | 13,801,858 | 94.0 | % | 3,000 | 0.1 | % |
(1) | The figures in the table in respect of Class A Common Stock do not include the shares of Class B Common Stock beneficially owned by the specified persons, which shares of Class B Common Stock are convertible at any time on a share for share basis to Class A Common Stock. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally attributes ownership to persons who have voting or investment power with respect to the relevant securities. Shares of Common Stock subject to options either currently exercisable or exercisable within 60 days are deemed outstanding for computing the percentage of the person holding such options but are not deemed outstanding for computing the percentage of any other person. Except as indicated by these footnotes, and subject to community property laws where applicable, the persons named in the table have sole voting and investment power with respect to all securities shown as beneficially owned by them. |
Shares of Class A Common Stock subject to options currently exercisable or exercisable within 60 days include the following: A. Hovnanian (1,287,500), P. Buchanan (30,000), G. DeCesaris, Jr., (225,000), A. Greenbaum (21,667), K. Hake (10,000), E. Kangas (13,000), D. McDonald (27,333), J. Robbins (17,333), J. Sorsby (185,000), S. Weinroth (23,000), and all Directors and executive officers as a group (1,846,083). No shares of Class B Common Stock are subject to options currently exercisable or exercisable within 60 days. |
(2) | Based upon the number of shares outstanding plus options currently exercisable or exercisable within 60 days held by each such Director, nominee, executive officer or holder. |
(3) | Each Depositary Share represents 1/1,000th of a share of 7.625% Series A Preferred Stock. |
(4) | Includes 4,833,826 shares of Class B Common Stock held by the Kevork S. Hovnanian Family Limited Partnership, a Connecticut limited partnership (the “Limited Partnership”), beneficial ownership of which is disclaimed by Kevork S. Hovnanian. Kevork S. Hovnanian’s wife, Sirwart Hovnanian, as trustee of the Sirwart Hovnanian 1994 Marital Trust, is the managing general partner of the Limited Partnership and as such has the sole power to vote and dispose of the shares of Class B Common Stock held by the Limited Partnership. Also includes 529,124 shares of Class B Common Stock held in trust for Mr. Hovnanian’s daughter over which Sirwart Hovnanian, as trustee, shares with her daughter the power to dispose of and vote. In addition, includes 190,000 shares of Class A Common Stock held in the name of Sirwart Hovnanian over which she has sole power to dispose of and vote. Mr. Hovnanian disclaims beneficial ownership of the shares described in the preceding two sentences. |
(5) | Includes 1,235,107 shares of Class A Common Stock and 269,893 shares of Class B Common Stock held in a grantor retained annuity trust for Kevork S. Hovnanian (the “GRAT”) for which Ara K. Hovnanian is trustee and has a potential remainder interest, and 232,892 shares of Class A Common Stock and 189,832 shares of Class B Common Stock held in family related accounts and trusts as to which Ara K. Hovnanian has shared voting power and shared investment power. Ara K. Hovnanian disclaims beneficial ownership of such shares, except to the extent of his potential pecuniary interest in the GRAT and such other accounts and trusts. Ara K. Hovnanian’s address is 10 Hwy 35, P.O. Box 500, Red Bank, New Jersey 07701. |
(6) | Includes 35,000 shares of Class A Common Stock are held jointly with his spouse, Gail R. Buchanan. Paul W. Buchanan and Gail R. Buchanan share voting and investment power with respect to such shares. |
(7) | Includes 214 shares of Class A Common Stock held jointly with his spouse, Josephine A. DeCesaris. Geaton A. DeCesaris, Jr. and Josephine A. DeCesaris share voting and investment power with respect to such shares. |
(8) | Includes 200,000 shares of Class A Common Stock held by the DeCesaris Family LLC #1 and 289,566 shares of Class A Common Stock held by the DeCesaris Family LLC #3; beneficial ownership of which is disclaimed for both entities by Geaton A. DeCesaris, Jr. except to the extent of his pecuniary interest therein. |
(9) | Includes 21,458 shares of Class A Common Stock held by Five Queens, Inc., a subchapter S corporation owned by Geaton A. DeCesaris, Jr.’s children and of which he is the President and 20,000 shares of Class A Common Stock held by the Geaton A. DeCesaris Charitable Remainder Unitrust of which he is the trustee and beneficiary, beneficial ownership of which is disclaimed by Geaton A. DeCesaris, Jr. except to the extent of his pecuniary interest therein. |
(10) | Includes 27,870 shares of Class A Common Stock held by The Geaton & Joanne DeCesaris Family Foundation, Inc. over which Geaton A. DeCesaris, Jr.’s spouse may be deemed to share voting and investment power. Beneficial ownership of such shares is disclaimed by Mr. Decesaris. |
(11) | Director nominee for March 8, 2006 Annual Shareholders’ Meeting. |
(12) | Based solely upon information contained in a statement on Schedule 13G filed with the Securities and Exchange Commission on February 2, 2006. As of December 31, 2005, EARNEST Partners, L.L.C. had sole voting power with respect to 147,295 shares, shared voting power with respect to 3,117,091 shares and sole investment power with respect to 8,714,886 shares of Class A Common Stock. Address: 75 Fourteenth Street, Suite 2300, Atlanta, GA 30309. |
(13) | Based solely upon information contained in a statement on Schedule 13G jointly filed with the Securities and Exchange Commission on September 19, 2005 by Tontine Partners L.P., Tontine Management, L.L.C., Tontine Overseas Associates, L.L.C. and Jeffrey L. Gendell. Tontine Partners L.P. and Tontine Management, L.L.C. each have shared voting and investment power with respect to 1,584,288 shares of Class A Common Stock, Tontine Overseas Associates, L.L.C. has shared voting and investment power with respect to 1,278,959 shares of Class A Common Stock and Mr. Gendell has sole voting and investment power with respect to 120,000 shares of Common Stock and shared voting and investment power with respect to 1,278,959 shares of Class A Common Stock. Address: 55 Railroad Avenue, 3rd Floor, Greenwich, Connecticut 06830. |
year 2005 a sale of shares held by a trust for the benefit of the family of one of his sisters, which sale was made at the direction of one of the other trustees but should have been reported earlier.
Name | | Age | | Company Affiliation | | Year First Became a Director | ||||||||
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Kevork S. Hovnanian | 82 | Chairman of the Board & Director | 1967 | |||||||||||
Ara K. Hovnanian | 48 | President, Chief Executive Officer & Director | 1981 | |||||||||||
Robert B. Coutts | 55 | Director Nominee | Nominee — 2006 | |||||||||||
Geaton A. DeCesaris, Jr. | 50 | President of the Hovnanian Land Investment Group & Director | 2001 | |||||||||||
Edward A. Kangas | 61 | Director | 2002 | |||||||||||
Joseph A. Marengi | 52 | Director Nominee | Nominee — 2006 | |||||||||||
John J. Robbins | 66 | Director | 2001 | |||||||||||
J. Larry Sorsby | 50 | Executive Vice President, Chief Financial Officer & Director | 1997 | |||||||||||
Stephen D. Weinroth | 67 | Director | 1982 |
Mr. K. Hovnanian is the founder of the Company and has served as Chairman of the Board since its original incorporation in 1967. He served as Chief Executive Officer from 1967 through July 1997. In 1996, the New Jersey Institute of Technology awarded Mr. Hovnanian a President’s Medal for “Distinguished Achievement to an Outstanding Entrepreneur”. In 1992, Mr. Hovnanian was granted one of five nationwide Harvard Dively Awards for Leadership in Corporate Public Initiatives. | ||||||
Mr. A. Hovnanian has been Chief Executive Officer since 1997 after being appointed President in 1988 and Executive Vice President in 1983. Mr. A. Hovnanian joined the Company in 1979 and has been a Director of the Company since 1981. In 1985, Governor Kean appointed Mr. Hovnanian to The Council on Affordable Housing and he was reappointed to the Council in 1990 by Governor Florio. In 1994, Governor Whitman appointed him as member of the Governor’s Economic Master Plan Commission. Mr. Hovnanian serves as Member of the Advisory Council of PNC Bank. Mr. A. Hovnanian is the son of Mr. K. Hovnanian. | ||||||
Mr. Coutts is an Executive Vice President of Lockheed Martin Corporation (NYSE) and is responsible for the Corporation’s Electronic Systems business area, with sales greater than $10 billion. Mr. Coutts was President and CEO of the former Electronics Sector of Lockheed Martin. He was elected an officer by the Board of Lockheed Martin in December 1996. Mr. Coutts held management positions with General Electric Corporation (NYSE) from 1972-1993, and was with GE Aerospace when it became part of Lockheed Martin in 1993. Mr. Coutts is a member of the boards of directors of several Lockheed Martin subsidiaries (LM Integrated Systems, Inc., LM United Kingdom, LM Espana, and LM Sippican Holdings, Inc.). Mr. Coutts is also currently the CEO and Deputy Chairman of the Association of the U.S. Army (AUSA) Council of Trustees; a member of the Board of Governors of Wesley Theological Seminary; and the Board of Overseers, College of Engineering, Tufts University. | ||||||
Mr. DeCesaris, Jr. has served as President of the Hovnanian Land Investment Group since July 2003. Prior to this position, Mr. Decesaris, Jr. was President of Homebuilding Operations and Chief Operating Officer since January 2001. Prior to joining the Company in 2001, Mr. DeCesaris, Jr. served as Chairman, President, and Chief Executive Officer of Washington Homes, Inc. Mr. DeCesaris, Jr. was honored as the Washington, D.C. area’s Entrepreneur of the Year in the real estate category in 1994, sponsored by Inc. magazine and Ernst & Young LLP. Mr. DeCesaris, Jr. also serves on the Board of Anne Arundel Medical Center Foundation, as well as other charitable organizations, and as Trustee of Mount Saint Mary’s University. Mr. DeCesaris, Jr. was elected as a Director of the Company in January 2001. | ||||||
Mr. Kangas was Chairman and Chief Executive Officer of Deloitte Touche Tohmatsu from December 1989 to May 2000, when he retired. He also serves on the Boards of Electronic Data Systems, Inc. (NYSE), Eclipsys, Inc. (NASDAQ), Tenet Healthcare Corporation, Inc. (NYSE), and Oncology Therapeutics Network, Inc. Mr. Kangas is also Chairman of the Board of the National Multiple Sclerosis Society. Mr. Kangas was elected as a Director of the Company in September 2002, is Chairman of the Company’s Audit Committee and a member of the Company’s Compensation Committee. |
Mr. Marengi serves as Senior Vice President for Dell Inc.’s (NASDAQ) Americas business, which includes the U.S. Consumer Business and Dell International Services (DIS). Mr. Marengi joined Dell in July 1997 from Novell Inc. (NASDAQ) where he was President and Chief Operating Officer. He joined Novell in 1989 and moved through successive promotions to become Executive Vice President of worldwide sales and field operations. For 10 years prior to joining Novell, Mr. Marengi served in various other executive, sales and information management positions. Mr. Marengi also serves on the Corporate Advisory Board of the USC Marshall School of Business and is a member of the Board for Dell Financial Services. | ||||||
Mr. Robbins was a Managing Partner of the New York Office of Kenneth Leventhal & Company and Executive Committee Partner, retiring from the firm in 1992. He was made a Partner of Kenneth Leventhal & Company in 1973. Mr. Robbins has been a Trustee of Keene Creditors Trust since 1996. He has also been a Director and the Chairman of the Audit Committee of Raytech Corporation since May 2003. Mr. Robbins was elected as a Director of the Company in January 2001, and is a member of the Company’s Audit Committee. | ||||||
Mr. Sorsby has been Chief Financial Officer of the Company since 1996 and Executive Vice President since November 2000. From March 1991 to November 2000, he was Senior Vice President, and from March 1991 to July 2000, he was Treasurer. Mr. Sorsby was elected as a Director of the Company in 1997. | ||||||
Mr. Weinroth is a Managing Member of Hudson Capital Advisors, LLC, a private equity merchant banking firm, and a Managing Director and Board Member of Kline Hawkes & Co., a manager of private equity funds. From 1989 to 2003, he served as co-Chairman and head of the Investment Committee at First Britannia Mezzanine N.V., a European private investment firm. He is Chairman of the Board Emeritus of Core Laboratories, N.V. (NYSE), a global oil field service company where he was Chairman of the Board. He is Vice Chair of the Central Asian American Enterprise Fund and Chairman of the Board of The Joyce Theatre Foundation Inc., as well as a Trustee of the Horace Mann School. Mr. Weinroth has been a Director of the Company since 1982, and is a member of the Company’s Audit and Compensation Committees. |
Company’s independent registered public accounting firm and meeting with them to review the results of their work as well as their recommendations. The Audit Committee appoints the Company’s independent registered public accounting firm and also approves and reviews their fees.
REGISTERED PUBLIC ACCOUNTING FIRM
Annual Compensation | Long-Term Compensation | ||||||||||||||||||||||||||||||
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Awards | Payouts | ||||||||||||||||||||||||||||||
Name & Principal Position | | Year or Period | | Salary | | Bonus(1) | | Other Annual Compen- sation(2) | | Restricted Stock Awards(3) | | Number of Securities Underlying Options/ SARs(4) | | All Other Compen- sation(5) | |||||||||||||||||
Kevork S. Hovnanian | 2005 | $ | 1,090,350 | $ | 5,207,428 | $ | 258,329 | — | — | $ | 17,090 | ||||||||||||||||||||
Chairman of the Board | 2004 | $ | 1,129,999 | $ | 5,566,000 | $ | 105,791 | — | — | $ | 16,633 | ||||||||||||||||||||
2003 | $ | 1,101,782 | $ | 6,128,000 | — | — | — | $ | 16,414 | ||||||||||||||||||||||
Ara K. Hovnanian | 2005 | $ | 1,015,729 | $ | 10,928,190 | $ | 564,973 | $ | 5,620,212 | 495,834 | $ | 1,352,595 | |||||||||||||||||||
President and Chief | 2004 | $ | 1,111,022 | $ | 7,696,808 | $ | 158,285 | $ | 3,958,358 | 600,000 | $ | 572,260 | |||||||||||||||||||
Executive Officer | 2003 | $ | 1,034,029 | $ | 6,989,600 | $ | 72,339 | $ | 2,566,080 | 600,000 | $ | 484,139 | |||||||||||||||||||
J. Larry Sorsby | 2005 | $ | 325,227 | $ | 974,220 | — | $ | 501,027 | 35,417 | $ | 190,631 | ||||||||||||||||||||
Executive Vice President | 2004 | $ | 296,472 | $ | 998,130 | — | $ | 513,324 | 50,000 | $ | 119,958 | ||||||||||||||||||||
and Chief Financial Officer | 2003 | $ | 321,283 | $ | 1,052,245 | — | $ | 541,154 | 50,000 | $ | 102,759 | ||||||||||||||||||||
Kevin C. Hake | 2005 | $ | 252,173 | $ | 190,750 | — | $ | 98,100 | — | $ | 28,487 | ||||||||||||||||||||
Senior Vice President/ | 2004 | $ | 221,188 | $ | 181,411 | — | $ | 93,297 | 5,000 | $ | 17,284 | ||||||||||||||||||||
Finance & Treasurer | 2003 | $ | 207,733 | $ | 171,283 | — | $ | 88,088 | — | $ | 14,639 | ||||||||||||||||||||
Paul W. Buchanan | 2005 | $ | 226,898 | $ | 188,125 | — | $ | 96,750 | — | $ | 42,990 | ||||||||||||||||||||
Senior Vice President/ | 2004 | $ | 205,214 | $ | 177,729 | — | $ | 91,403 | 5,000 | $ | 34,750 | ||||||||||||||||||||
Corporate Controller | 2003 | $ | 204,603 | $ | 173,586 | — | $ | 89,272 | — | $ | 26,596 |
(1) | Includes cash awards not paid until after year end. In fiscal year 2003, for A. Hovnanian, also includes 27,326 shares of Class B Common Stock with an approximate dollar value of $2,000,000, which was not received until after year end. |
(2) | Includes perquisites and other personal benefits unless the aggregate amount is less than the lesser of $50,000 or 10% of the total of annual salary and bonus reported for the named executive officer. Perquisites for K. Hovnanian in fiscal year 2005 and 2004 include $195,532 and $45,006, respectively, relating to personal use of the Company’s corporate aircraft and $59,804 in fiscal 2004 relating to personal use of the Company’s corporate cars. Perquisites for A. Hovnanian in fiscal years 2005, 2004 and 2003 include $480,770, $83,463, and $55,029, respectively, relating to personal use of the Company’s corporate aircraft and $57,492 in fiscal 2004 relating to personal use of the Company’s corporate cars. |
(3) | Represents the right to receive Class A Common Stock after vesting 25% a year for four years. Any executive with 20 years of service (which includes A. Hovnanian and P. Buchanan) or who reaches the age of 58 becomes immediately 100% vested. Awards of restricted stock during fiscal years 2005, 2004, and 2003 amounted to 124,922 shares, 108,717 shares, and 108,102 shares, respectively, for A. Hovnanian; 11,137 shares, 14,099 shares, and 22,798 shares, respectively, for J. Sorsby; 2,181 shares, 2,563 shares, and 3,712 shares, respectively, for K. Hake; and 2,151 shares, 2,511 shares and 3,762 shares, respectively, for P. Buchanan. Such awards of restricted stock are presented based upon the closing price of the Class A Common Stock on the New York Stock Exchange on the date of grant. The aggregate number of shares of restricted stock held as of October 31, 2005, and the value thereof as of such date based upon the closing price of the Class A Common Stock on October 31, 2005 on the New York Stock Exchange of $44.99, were as follows: A. Hovnanian: 749,323 shares ($33,712,042); J. Sorsby: 149,638 shares ($6,732,214); K. Hake: 12,040 shares ($541,680); and P. Buchanan: 35,806 shares ($1,610,912). |
(4) | The Company has not granted any stock appreciation rights. |
(5) | Includes accruals under the Company’s savings and investment retirement plan (the “Retirement Plan”), deferred compensation plan (the “Deferred Plan”) and term life insurance premiums for the named executive officers for fiscal year 2005 as follows: |
| Retirement Plan | | Deferred Plan | | Term Insurance | | Total | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Kevork S. Hovnanian | $ | 16,700 | — | $ | 390 | $ | 17,090 | |||||||||||
Ara K. Hovnanian | $ | 16,700 | $ | 1,335,115 | $ | 780 | $ | 1,352,595 | ||||||||||
J. Larry Sorsby | $ | 16,700 | $ | 173,444 | $ | 487 | $ | 190,631 | ||||||||||
Kevin C. Hake | $ | 10,400 | $ | 17,697 | $ | 390 | $ | 28,487 | ||||||||||
Paul W. Buchanan | $ | 16,700 | $ | 25,900 | $ | 390 | $ | 42,990 |
Individual Grants | Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term(3) | | ||||||||||||||||||||||||
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Name | | Number of Securities Underlying Options Granted(2) | | % of Total Options Granted to Employees in Fiscal 2005 | | Exercise or Base Price Per Share | | Expiration Date | | 5% | | 10% | ||||||||||||||
Kevork S. Hovnanian | — | — | — | — | — | — | ||||||||||||||||||||
Ara K. Hovnanian | 350,000 | 46.1 | % | $ | 41.200 | 12/02/14 | $ | 9,068,661 | $ | 22,981,766 | ||||||||||||||||
Ara K. Hovnanian | 145,834 | 19.2 | % | $ | 56.820 | 05/19/15 | $ | 5,211,202 | $ | 13,206,209 | ||||||||||||||||
J. Larry Sorsby | 25,000 | 3.3 | % | $ | 41.200 | 12/02/14 | $ | 647,761 | $ | 1,641,555 | ||||||||||||||||
J. Larry Sorsby | 10,417 | 1.4 | % | $ | 56.820 | 05/19/15 | $ | 372,239 | $ | 943,327 | ||||||||||||||||
Kevin C. Hake | — | — | — | — | — | — | ||||||||||||||||||||
Paul W. Buchanan | — | — | — | — | — | — |
(1) | The Company has not granted any stock appreciation rights. |
(2) | The options granted to A. Hovnanian were for the purchase of shares of the Company’s Class B Common Stock. The options granted to J. Sorsby were for the purchase of shares of the Company’s Class A Common Stock. |
(3) | The potential realizable value is reported net of the option exercise price, but before income taxes associated with exercise. These amounts represent assumed annual compounded rates of appreciation of 5% and 10% only from the date of grant to the end of the option. Actual gains, if any, on stock option exercises are dependent on future performance of the Company’s Class A Common Stock or Class B Common Stock, as applicable, overall stock market conditions, and the optionee’s continued employment through the vesting period. The amounts reflected in this table may not necessarily be achieved. |
October 31, 2005 and Option Values at October 31, 2005(1)
Number of Securities Underlying Unexercised Options at October 31, 2005 | Value of Unexercised In-the-Money Options at October 31, 2005(2) | ||||||||||||||||||||||||||
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Name | | Shares Acquired On Exercise | | Value Realized | | Exercisable | | Unexercisable | | Exercisable | | Unexercisable | |||||||||||||||
Kevork S. Hovnanian | — | — | — | — | — | — | |||||||||||||||||||||
Ara K. Hovnanian | 550,000 | $ | 28,351,750 | 1,287,500 | 1,858,334 | $ | 50,647,438 | $ | 27,204,750 | ||||||||||||||||||
J. Larry Sorsby | — | — | 185,000 | 170,417 | $ | 7,351,150 | $ | 3,113,150 | |||||||||||||||||||
Kevin C. Hake | 5,000 | $ | 230,256 | 10,000 | 15,000 | $ | 403,581 | $ | 464,431 | ||||||||||||||||||
Paul W. Buchanan | 35,000 | $ | 1,809,775 | 30,000 | 20,000 | $ | 1,054,584 | $ | 438,166 |
(1) | The Company has not granted any stock appreciation rights. |
(2) | Based upon the closing price of the Class A Common Stock on October 31, 2005 the New York Stock Exchange of $ 44.99. |
Average Quarterly Common Equity (“ROAQE”). Other senior executives, including Mr. K. Hovnanian, Chairman of the Board, receive a fixed amount bonus which is based on the Company’s ROAQE. All other executive officers and key management employees participate in the 1999 Plan, which is based on ROAQE and they receive either a fixed amount or a percentage of their base salary. As the Company’s ROAQE reaches higher targeted levels, the fixed amount or bonus percentage of salary increases.
Stephen D. Weinroth, Chair
Edward A. Kangas
AMONG HOVNANIAN ENTERPRISES, INC., THE S&P 500 INDEX
AND THE S&P HOMEBUILDING INDEX
Source: Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.
• | the overall scope and plans for such accounting firm’s respective audits of the Company, |
• | such accounting firm’s judgments as to the quality, not just the acceptability, of the Company’s accounting principles, |
• | such accounting firm’s independence from management and the Company, including matters in the written disclosures and the letter from the independent registered public accounting firm required by Independence Standards Board Standard No. 1 and received by the Company, |
• | and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards and under Statements on Auditing Standards No. 61. |
Edward A. Kangas, Chair
Desmond P. McDonald
John J. Robbins
Stephen D. Weinroth
c/o Mr. Edward A. Kangas, Director & Chairman of the Audit Committee
Privileged & Confidential
Hovnanian Enterprises, Inc.
10 Highway 35
P.O. Box 500
Red Bank, N.J. 07701
c/o Mr. Edward A. Kangas, Director & Chairman of the Audit Committee
Privileged & Confidential
Hovnanian Enterprises, Inc.
10 Highway 35
P.O. Box 500
Red Bank, N.J. 07701
proxy card, which is specially designed for beneficial owners of Class B Common Stock. The Company has also supplied nominee holders of Class B Common Stock with instructions and specially designed proxy cards to accommodate the voting of the Class B Common Stock. In accordance with the Company’s amended Certificate of Incorporation, shares of Class B Common Stock held in nominee name will be entitled to ten votes per share only if the beneficial owner proxy card and the nominee proxy card relating to such shares is properly completed, mailed, and received by ADP, the Company’s proxy service facilitator, not less than 3 nor more than 20 business days prior to March 8, 2006. Proxy cards should be mailed to Hovnanian Enterprises, Inc., c/o ADP, 51 Mercedes Way, Edgewood, N.Y., 11717.
HOVNANIAN ENTERPRISES, INC.
February 7, 2006
10 HIGHWAY 35 P.O. BOX 35 RED BANK, NJ 07701 | VOTE BY INTERNET - www.proxyvote.com ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS VOTE BY PHONE - 1-800-690-6903 VOTE BY MAIL If you vote over the Internet or by telephone, |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | HONAN1 | KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY | ||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
HOVNANIAN ENTERPRISES, INC. | |||||||||||||
Vote On Directors | |||||||||||||
1. | Election of Directors. | For All | Withhold All | For All Except | To withhold authority to vote, mark "For All Except" and write the nominee's number on the line below. | ||||||||
(01) K. Hovnanian (02) A. Hovnanian (03) R. Coutts (04) G. DeCesaris, Jr. (05) E. Kangas | (06) J. Marengi (07) J. Robbins (08) J. Sorsby (09) S. Weinroth | ||||||||||||
o | o | o | |||||||||||
Vote On Proposals | For | Against | Abstain | ||||||||
2. | Ratification of the selection of Ernst & Young LLP as the Company's independent registered public accounting firm for the year ended October 31, 2006. | o | o | o | 3. | On any other matters in accordance with the discretion of the named proxies and agents, if no instructions to the contrary are indicated in items (1) and (2). | |||||
Please mark, sign, date and return the proxy card promptly using the enclosed envelope. This Proxy must be signed exactly as name appears hereon. Executors, administrators, trustees, etc., should give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer. | |
For address changes and/or comments, please check this box and write them on the back where indicated | o | ||||||
Yes | No | ||||||
Please indicate if you plan to attend this meeting | o | o | |||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
PROXY HOVNANIAN ENTERPRISES, INC. Class A Common Stock This Proxy is Solicited on Behalf of the Board of Directors The undersigned hereby constitutes and appoints Peter S. Reinhart and Paul W. Buchanan, and each of them, his true and lawful agents and proxies with full power of substitution in each, to represent the undersigned at the Annual Meeting of Shareholders of HOVNANIAN ENTERPRISES, INC. to be held in the Chelsea Meeting Room of the Millenium Hilton Hotel, 55 Church Street, New York, N.Y. 10007, at 10:30 a.m. on March 8, 2006, and at any adjournments thereof, upon the matters set forth in the notice of meeting and Proxy Statement dated February 7, 2006 and upon all other matters properly coming before said meeting. This proxy when properly executed will be voted (1) for the election of the nominees to the Board of Directors; (2) for the ratification of the selection of Ernst & Young LLP as the Company's independent registered public accounting firm; and (3) on any other matters in accordance with the discretion of the named proxies and agents, if no instructions to the contrary are indicated in items (1) and (2). |
Address Changes/Comments: | |||
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) |
SEE REVERSE SIDE | CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SEE REVERSE SIDE |
10 HIGHWAY 35 P.O. BOX 35 RED BANK, NJ 07701 | VOTE BY INTERNET - www.proxyvote.com ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS VOTE BY PHONE - 1-800-690-6903 VOTE BY MAIL If you vote over the Internet or by telephone, |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | HONAN3 | KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY | ||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
HOVNANIAN ENTERPRISES, INC. | |||||||||||||
Vote On Directors | |||||||||||||
1. | Election of Directors. | For All | Withhold All | For All Except | To withhold authority to vote, mark "For All Except" and write the nominee's number on the line below. | ||||||||
(01) K. Hovnanian (02) A. Hovnanian (03) R. Coutts (04) G. DeCesaris, Jr. (05) E. Kangas | (06) J. Marengi (07) J. Robbins (08) J. Sorsby (09) S. Weinroth | ||||||||||||
o | o | o | |||||||||||
Vote On Proposals | For | Against | Abstain | ||||||||
2. | Ratification of the selection of Ernst & Young LLP as the Company's independent registered public accounting firm for the year ended October 31, 2006. | o | o | o | 3. | On any other matters in accordance with the discretion of the named proxies and agents, if no instructions to the contrary are indicated in items (1) and (2). | |||||
Please mark, sign, date and return the proxy card promptly using the enclosed envelope. This Proxy must be signed exactly as name appears hereon. Executors, administrators, trustees, etc., should give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer. | |
For address changes and/or comments, please check this box and write them on the back where indicated | o | ||||||
Yes | No | ||||||
Please indicate if you plan to attend this meeting | o | o | |||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
PROXY HOVNANIAN ENTERPRISES, INC. Class B Common Stock This Proxy is Solicited on Behalf of the Board of Directors The undersigned hereby constitutes and appoints Peter S. Reinhart and Paul W. Buchanan, and each of them, his true and lawful agents and proxies with full power of substitution in each, to represent the undersigned at the Annual Meeting of Shareholders of HOVNANIAN ENTERPRISES, INC. to be held in the Chelsea Meeting Room of the Millenium Hilton Hotel, 55 Church Street, New York, N.Y. 10007, at 10:30 a.m. on March 8, 2006, and at any adjournments thereof, upon the matters set forth in the notice of meeting and Proxy Statement dated February 7, 2006 and upon all other matters properly coming before said meeting. This proxy when properly executed will be voted (1) for the election of the nominees to the Board of Directors; (2) for the ratification of the selection of Ernst & Young LLP as the Company's independent registered public accounting firm; and (3) on any other matters in accordance with the discretion of the named proxies and agents, if no instructions to the contrary are indicated in items (1) and (2). |
Address Changes/Comments: | |||
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) |
SEE REVERSE SIDE | CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SEE REVERSE SIDE |
10 HIGHWAY 35 P.O. BOX 35 RED BANK, NJ 07701 | VOTE BY MAIL |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | HONAN5 | KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY | ||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
HOVNANIAN ENTERPRISES, INC. | |||||||||||||
Vote On Directors | |||||||||||||
1. | Election of Directors. | For All | Withhold All | For All Except | To withhold authority to vote, mark "For All Except" and write the nominee's number on the line below. | ||||||||
(01) K. Hovnanian (02) A. Hovnanian (03) R. Coutts (04) G. DeCesaris, Jr. (05) E. Kangas | (06) J. Marengi (07) J. Robbins (08) J. Sorsby (09) S. Weinroth | ||||||||||||
o | o | o | |||||||||||
Vote On Proposals | For | Against | Abstain | ||||||||
2. | Ratification of the selection of Ernst & Young LLP as the Company's independent registered public accounting firm for the year ended October 31, 2006. | o | o | o | 3. | On any other matters in accordance with the discretion of the named proxies and agents, if no instructions to the contrary are indicated in items (1) and (2). | |||||
Please mark, sign, date and return the proxy card promptly using the enclosed envelope. This Proxy must be signed exactly as name appears hereon. Executors, administrators, trustees, etc., should give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer. | |
For address changes and/or comments, please check this box and write them on the back where indicated | o | ||||||
Yes | No | ||||||
Please indicate if you plan to attend this meeting | o | o | |||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
PROXY The undersigned hereby constitutes and appoints Peter S. Reinhart and Paul W. Buchanan, and each of them, his true and lawful agents and proxies with full power of substitution in each, to represent the undersigned at the Annual Meeting of Shareholders of HOVNANIAN ENTERPRISES, INC. to be held in the Chelsea Meeting Room of the Millenium Hilton Hotel, 55 Church Street, New York, N.Y. 10007, at 10:30 a.m. on March 8, 2006, and at any adjournments thereof, upon the matters set forth in the notice of meeting and Proxy Statement dated February 7, 2006 and upon all other matters properly coming before said meeting. |
Address Changes/Comments: | |||
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) |
SEE REVERSE SIDE | CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SEE REVERSE SIDE |
10 HIGHWAY 35 P.O. BOX 35 RED BANK, NJ 07701 | VOTE BY MAIL |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | HONAN7 | KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY | ||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
HOVNANIAN ENTERPRISES, INC. | |||||||||||||
Vote On Directors | |||||||||||||
1. | Election of Directors. | For All | Withhold All | For All Except | To withhold authority to vote, mark "For All Except" and write the nominee's number on the line below. | ||||||||
(01) K. Hovnanian (02) A. Hovnanian (03) R. Coutts (04) G. DeCesaris, Jr. (05) E. Kangas | (06) J. Marengi (07) J. Robbins (08) J. Sorsby (09) S. Weinroth | ||||||||||||
o | o | o | |||||||||||
Vote On Proposals | For | Against | Abstain | ||||||||
2. | Ratification of the selection of Ernst & Young LLP as the Company's independent registered public accounting firm for the year ended October 31, 2006. | o | o | o | 3. | On any other matters in accordance with the discretion of the named proxies and agents, if no instructions to the contrary are indicated in items (1) and (2). | |||||
Please mark, sign, date and return the proxy card promptly using the enclosed envelope. This Proxy must be signed exactly as name appears hereon. Executors, administrators, trustees, etc., should give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer. | |
For address changes and/or comments, please check this box and write them on the back where indicated | o | ||||||
Yes | No | ||||||
Please indicate if you plan to attend this meeting | o | o | |||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
PROXY The undersigned hereby constitutes and appoints Peter S. Reinhart and Paul W. Buchanan, and each of them, his true and lawful agents and proxies with full power of substitution in each, to represent the undersigned at the Annual Meeting of Shareholders of HOVNANIAN ENTERPRISES, INC. to be held in the Chelsea Meeting Room of the Millenium Hilton Hotel, 55 Church Street, New York, N.Y. 10007, at 10:30 a.m. on March 8, 2006, and at any adjournments thereof, upon the matters set forth in the notice of meeting and Proxy Statement dated February 7, 2006 and upon all other matters properly coming before said meeting. |
Address Changes/Comments: | |||
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) |
SEE REVERSE SIDE | CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SEE REVERSE SIDE |
VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Hovnanian Enterprises, Inc., c/o ADP, 51 Mercedes Way, Edgewood, NY 11717. Voting instructions must be received not less than 3 nor more than 20 business days prior to the meeting date. | ||
This proxy when properly executed will be voted (1) for the election of the nominees to the Board of Directors; (2) for the ratification of the selection of Ernst & Young LLP as the Company's independent registered public accounting firm; and (3) on any other matters in accordance with the discretion of the named proxies and agents, if no instructions to the contrary are indicated in items (1) and (2). | ||
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | HONAN7 |
|
PLEASE "X" HERE ONLY IF YOU PLAN TO ATTEND THE
MEETING AND VOTE THESE SHARES IN PERSON o
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | ||||||||||||
Vote On Directors | ||||||||||||
For All | Withhold All | For All Except | To withhold authority to vote, mark "For All Except" and write the nominee's number on the line below. | |||||||||
1. | Election of Directors. | |||||||||||
(01) K. Hovnanian (02) A. Hovnanian (03) R. Coutts (04) G. DeCesaris, Jr. (05) E. Kangas | (06) J. Marengi (07) J. Robbins (08) J. Sorsby (09) S. Weinroth | o | o | o | ||||||||
Vote on Proposals | For | Against | Abstain | |||||
2. | Ratification of the selection of Ernst & Young LLP as the Company's independent registered public accounting firm for the year ended October 31, 2006. | o | o | o | ||||
3. | On any other matters in accordance with the discretion of the named proxies and agents, if no instructions to the contrary are indicated in items (1) and (2). | |||||||
By signing on the reverse hereof, the undersigned certifies that (A) with respect to _________ of the shares represented by this proxy, the undersigned has been the beneficial owner of such shares continuously since the date of their issuance or is a Permitted Transferee (as defined in paragraph 4(A)(i) of paragraph FOURTH of the Company's amended Certificate of Incorporation) of any such beneficial owner and (B) with respect to the remaining _________ shares represented by this proxy, the undersigned has not been the beneficial owner of such shares continuously since the date of their issuance nor is the undersigned a Permitted Transferee of any such beneficial owner. | ||||||||
If no certification is made, it will be deemed that all shares of Class B common stock represented by this proxy have not been held continuously, since the date of issuance, for the benefit or account of the same beneficial owner of such shares or any Permitted Transferee. | ||||||||
Please mark, sign, date and return the proxy card promptly using the enclosed envelope. This Proxy must be signed exactly as name appears hereon. Executors, administrators, trustees, etc., should give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer. | ||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |